Strategies for Improved Earned Value Management Use by Defense Business Leaders
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1 Walden University ScholarWorks Walden Dissertations and Doctoral Studies Walden Dissertations and Doctoral Studies Collection 2017 Strategies for Improved Earned Value Management Use by Defense Business Leaders Kevin Robert Rhodes Walden University Follow this and additional works at: Part of the Business Commons This Dissertation is brought to you for free and open access by the Walden Dissertations and Doctoral Studies Collection at ScholarWorks. It has been accepted for inclusion in Walden Dissertations and Doctoral Studies by an authorized administrator of ScholarWorks. For more information, please contact
2 Walden University College of Management and Technology This is to certify that the doctoral study by Kevin Rhodes has been found to be complete and satisfactory in all respects, and that any and all revisions required by the review committee have been made. Review Committee Dr. Irene Williams, Committee Chairperson, Doctor of Business Administration Faculty Dr. Matthew Knight, Committee Member, Doctor of Business Administration Faculty Dr. Yvonne Doll, University Reviewer, Doctor of Business Administration Faculty Chief Academic Officer Eric Riedel, Ph.D. Walden University 2017
3 Abstract Strategies for Improved Earned Value Management Use by Defense Business Leaders by Kevin Rhodes MS, Troy State University, 2003 BA, University of Florida, 1997 Doctoral Study Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Business Administration Walden University July 2017
4 Abstract Project cost and schedule forecasting accuracy in the defense industry has not significantly changed since the 1960s, making it difficult for defense business leaders to implement successful earned value management (EVM) strategies. The purpose of this multiple case study was to explore EVM strategies that Washington, D.C. area defense contractor business leaders used to improve costs and schedule goal accomplishment. The conceptual framework for this study was the earned time theory. Data were collected from semistructured interviews from 5 defense contractor business leaders with demonstrated use of EVM strategy. The review of company documents focused on EVM use with reporting requirements, and archival EVM study analysis supplemented the data from the semistructured interviews. Data were triangulated and inductively analyzed for themes, and member checking was done to ensure credibility of the interpretations. Four themes emerged from the data: the use of EVM data to improve outcomes, the existence of essential strategies, the role of EVM as but a single tool, and the essential engagement of leadership. Findings may contribute to social change because defense business contractor leaders could help improve business performance and return resources for social improvement. Investment in social and environmental improvements can strengthen employee commitment and ultimately ties to the community at large, furthering social improvement.
5 Strategies for Improved Earned Value Management Use by Defense Sector Leaders by Kevin Rhodes MS, Troy State University, 2003 BA, University of Florida, 1997 Doctoral Study Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Business Administration Walden University July 2017
6 Dedication I dedicate this study and completion of my Doctorate in Business Administration to my mother and father and my maternal grandparents. While each of them has passed on, their love and encouragement continues to bolster me throughout my life. I carry their love and support with me and I will do so all the days of my life.
7 Acknowledgments I would like to thank my committee chair, Dr. Irene Williams for her guidance, input, insight, and most importantly her positive commitment to my success in my doctoral journey. Her positive attitude was uplifting and encouraging throughout the entire process. I also would like to thank committee members Dr. Matthew Knight, my second committee member, along with Dr. James Savard and Dr. Yvonne Doll, university research reviewers (URR), for their immensely useful advice and input as well as their support through the journey. I can give no greater thank you than to my wife and love of my life. Sandi, this doctoral accomplishment is as much yours as it is mine.
8 Table of Contents List of Tables... iv Section 1: Foundation of the Study...1 Background of the Problem...1 Problem Statement...2 Purpose Statement...3 Nature of the Study...3 Research Question...5 Interview Questions...5 Conceptual Framework...6 Operational Definitions...7 Assumptions, Limitations, and Delimitations...8 Assumptions... 8 Limitations... 9 Delimitations... 9 Significance of the Study...10 A Review of the Professional and Academic Literature...11 Application to the Applied Business Problem Conceptual Framework Foundation Improvement of EVM Estimating Values EVM Analysis as a Skill Set Strategy Consideration i
9 Leadership Style and EVM Use Summary of the Literature Findings Transition...47 Section 2: The Project...49 Purpose Statement...49 Role of the Researcher...50 Participants...53 Eligibility Criteria Accessing Participants Research Method and Design...55 Research Method Research Design Population and Sampling...60 Population Sampling Sample Size Interview Setting Ethical Research...66 Data Collection Instruments...68 Data Collection Technique...70 Data Organization Technique...73 Data Analysis...74 ii
10 Reliability and Validity...77 Reliability Validity Transition and Summary...81 Section 3: Application to Professional Practice and Implications for Change...83 Introduction...83 Presentation of the Findings...84 Applications to Professional Practice...94 Implications for Social Change...96 Recommendations for Action...98 Recommendations for Further Research...98 Reflections...99 Conclusion References Appendix A: Interview Protocol and Consent Form iii
11 List of Tables Table 1. Summary of Sources Table 2. Frequency of Main Theme One Table 3. Frequency of Main Theme Two...89 Table 4. Frequency of Sub-themes under Theme Two...90 Table 5. Frequency of Main Theme Three...91 Table 6. Frequency of Main Theme Four...93 iv
12 Section 1: Foundation of the Study 1 Some defense business contractor leaders encounter problems meeting cost and schedule goals on projects (Kwak & Anabari, 2012). The problems with meeting defense project and cost goals occur even with use of monitoring systems such as earned value management (EVM) that provide insight into cost and schedule (Cantwell, Mazzuchi, & Sarkani, 2013). EVM can help project managers forecast issues, but project failures related to cost and schedule continue to occur at similar rates regardless of EVM use or EVM skill set teaching (Besterio, de Souza Pinto, & Novaski, 2015). The use of EVM provides insight into the cost of an effort from both a time and material set of parameters (Aliverdi, Naeni, & Salehipour, 2013). The likelihood of meeting cost and schedule goals is more probable to occur with a sufficient understanding of the cost and schedule associated with a project (Moy, 2016). Appropriate EVM strategy use that identifies cost and schedule issues to the project manager is a key component of project understanding (Moy, 2016). Background of the Problem Representatives of the U.S. Department of Defense created EVM in the 1960s for assistance in the attainment of project management goals (Kwak & Anabari, 2012). Since the 1960s, EVM adoption use occurred by many businesses, including significant use by the construction industry (De Marco & Narbeav, 2013). Researchers since 2010 have indicated that it is difficult to prove EVM use increased success in attaining cost and schedule goals without a concerted effort in tracking EVM data (Maheshwari & Credle,
13 2010). Further analysis has shown improvement of EVM outcomes with the 2 improvement of planned values (PVs) used to build the initial estimates. The use of EVM enhanced project management cost and schedule achievement for program managers with improved EVM values (Lu & Lu, 2013). EVM includes several values that form the foundation of the primary output of EVM such as estimate at completion (EAC) or estimate at completion for time (EAC[t]) (Chen, 2014). Additional examination showed with improved EVM values, expert knowledge, and application used with actual project data, this information could significantly reduce EAC deviation at project completion (Kim & Reinschmidt, 2011). While examination has proved that EVM can increase achievement of project management cost and schedule goals, project managers struggle with easy correlation and measurement of EVM value (Chen, 2014). Defense business leaders expend large amounts of resources using EVM, but cannot easily determine the strategies for using EVM that improve project cost and schedule outcomes (Kwak & Anabari, 2012). Problem Statement Defense project cost and schedule forecasting accuracy in the defense industry has not significantly changed since the 1960s, making it difficult for defense business leaders to implement successful EVM strategies (Mortaji, Bagherpour, & Noori, 2013). EVM paired with experience or other forecasting approaches can improve forecasting accuracy by more than 75% (Colin, Martens, Vanhoucke, & Wauters, 2015). The general business problem is that even though EVM use occurred for defense projects, the projects still failed to meet cost and schedule goals. The specific business problem is that some
14 defense contractor business leaders lack strategies for EVM use to improve cost and 3 schedule goal accomplishment. Purpose Statement The purpose of this qualitative multiple case study was to explore EVM strategies that Washington, D.C. area defense contractor business leaders used to improve cost and schedule goal accomplishment. The population included defense contractor business leaders who are vice presidents, directors, supervisors, and program managers working at three defense companies in the Washington, D.C. area. I adjusted the exact number of participants based upon when data saturation occurred. These defense contractor business leaders work for defense-focused companies and have demonstrated successful EVM strategy use on defense programs. The findings from this study could enable social change because defense business leaders could use additional resources to develop less harmful products that use less fuel, create less pollution, or use less environmentally toxic materials. When projects fall behind goals, project managers often deprioritize environmental improvements (Martinez-del-Rio & Céspedes-Lorente, 2014). The deprioritization of environmental improvements was due to the focus on returning the project back to baseline goals; however, with implementation of an effective EVM strategy, this deprioritization could be avoided (Martinez-del-Rio & Céspedes-Lorente, 2014). Nature of the Study I used a qualitative approach because I focused on the exploration of the participants experiences. Because this study relates to EVM strategies from actual
15 demonstrated experience by defense contractor business leaders, the qualitative method 4 was applicable. Quantitative researchers, in contrast, usually examine a causal relationship or relationship and difference between two or more variables (Groeneveld, Tummers, Bronkhorst, Ashikali, & van Thiel, 2015). Since I did not address a causal relationship or relationship and difference between two or more variables, quantitative methodology was inappropriate. A mixed method approach contains both qualitative and quantitative analysis (Patton, 2015). I did not address variables relationships in this study, and thus the mixed method was inappropriate. For this study, it was crucial to use a qualitative method for a deeper consideration of strategy. Researchers stated that responses from a survey would likely not provide the rich data necessary for a deeper review that a qualitative method could provide (Marshall, Cardon, Poddar, & Fontenot, 2013). Yin (2014) stated that the rationale for the use of a case study derives from a how and why relationship and focuses on a contemporary issue. In addition, a case study can be descriptive and focus on what issues such as strategy (Yin, 2014). Since I focused on a what issue or strategy review--a descriptive case study was applicable. Case study design does not require control of behavioral events (Yin, 2014). An alternate design to a case study was a phenomenological design in which the researcher focuses on studying the lived experiences of participants and highlights a phenomenon multiple individuals have experienced (Khan, 2014). Determining what EVM strategies defense businesses employ was not an extraordinary experience and so a phenomenological design was not suitable. Another alternative was an ethnographic design using interviews, but
16 5 ethnographers focus on group culture (Corbin & Strauss, 2014), which was not applicable to this study. Narrative design was another study design option, but a narrative design involves participants telling stories (Khan, 2014). A narrative design was not appropriate for this study because a full narrative story was not required. By using a case study, I identified and explored themes related to EVM strategies in the defense sector that aligned with Yin s (2014) circumstances for case study use. Research Question What EVM strategies do defense contractor business leaders use to improve project cost and schedule goal accomplishment? Interview Questions 1. What is your experience and background using EVM as a defense contractor business leader in your organization? 2. What EVM strategies have you used that improve a PM s ability to meet cost and schedule goals? 3. Why did you implement an EVM strategy for the projects at all? 4. How has using EVM improved project management in your organization? 5. What does EVM bring to a Project Manager s (PM) tool set to meet cost and schedule goals that other mechanisms do not? 6. What challenges have you encountered measuring the value of an EVM strategy on a project in the sense of positive or negative impact on cost and schedule goal accomplishment? 7. How were these challenges measuring the value of EVM addressed?
17 6 8. What implementation processes did you use to gain the most value from EVM use? 9. What additional considerations would you like to add regarding the use of EVM and EVM s value as a process in project management? Conceptual Framework The conceptual framework for this study came from the earned time theory. The theory provides a strong foundation to identify and explore answers to the research question. Efficiency experts, the Gilbreths, created earned time theory in the early 20th century (Gilbreth & Carey, 1948). The Gilbreths asserted that time for completion of a task has value (Gilbreth & Carey, 1948). The U.S. government created EVM theory in the late 1960s to improve project management of defense systems (Kwak & Anbari, 2012). The foundation of EVM comes from earned time theory (Sasirekha & Tripathi, 2013). EVM use has since migrated to other industries outside of the government (Kwak & Anbari, 2012). EVM theory identifies that work is broken down into packages with a cost and schedule value associated with completion of the work packages (Mortaji et al., 2013). The early detection or forecasting of issues can help save resources in a project (Kwak & Anbari, 2012). Chen (2014) stated that with accurate EVM use, improved comprehension of the project across all aspects of the project occurs. Implementation of EVM strategy in project management can provide reliable project management cost and schedule forecasts and actual value estimates for assessing progress and support managing the cost and schedule of the project (Ancosky, 2013). This conceptual
18 7 framework was applicable to the study because a thorough understanding of useful EVM strategies occurred during the study. With useful and actionable EVM strategies, defense contractor business leaders in the defense industry can improve project cost and schedule forecasts and improve outcomes. Operational Definitions Actual Cost (AC): Actual cost was the aggregate definite cost value either as a constant or intermittent sum of the real cost of work accomplished to date (Chen, 2014). Actual Cost of Work Performed (ACWP): Actual cost of work performed was the cost value of completed work as opposed to planned cost or the BCWP (Czemplik, 2014). Budgeted Cost of Work Performed (BCWP): Budgeted cost of work performed was the planned value for completed work as opposed to the actual value or ACWP (Czemplik, 2014). Budgeted Cost of Work Scheduled (BCWS): Budgeted cost of work scheduled definition happened before the start of work and was a planning value for cost related to schedule time (Czemplik, 2014). Cost Performance Index (CPI): Cost performance index was a metric that reflects the relationship between completed work and the planned budget for finished work in relation to the AC or the budget expended for the work (Hunter, Fitzgerald, & Barlow, 2014). Earned value (EV): Earned value was the summation of completed work against the planned work budget to date (Chen, 2014; Acebes, Pajares, Galán, & López-Paredes, 2014).
19 8 Earned value management (EVM): Earned value management was a method for program management that collects EV cost and schedule data for predicting final cost and schedule requirements for project completion (Chen, 2014; Hazır, 2015). Performance Measurement Baseline (PMB): A performance measurement baseline was a standard by which a reviewed project s progress provided a reference point of planned work that was accounted for in the budget while showing progress as work occurred (Mir & Pinnington, 2014; Shah, 2014). Schedule performance index (SPI): A schedule performance index reflects the relationship between the actual schedule and the planned schedule that represents the relationship between the achieved schedule and the planned schedule (Hunter et al., 2014). Work breakdown structure (WBS): A work breakdown structure was a graphical representation of required work for a project presented in a tree diagram that reflects numerous areas of effort for the respective project (Vanhoucke & Colin, 2016). Assumptions, Limitations, and Delimitations Assumptions Researchers, with selection of any research design, use some assumptions that underpin and support the overarching study focus (Brinkmann & Kvale, 2014). Assumptions are those ideas that are considered true and are treated as facts without verification by researchers (Marshall & Rossman, 2016). I made two assumptions in this study. The first assumption was that the EVM strategies that I reviewed have some level of transferability across defense projects. The second assumption was that the
20 9 participants were honest in their responses and experience in using EVM to meet cost and schedule goals for defense projects. Limitations Limitations are shortfalls or possible weakness in research (Cunha & Miller, 2014). Several limitations were evident in this study. The first limitation was personal bias that derives from my extensive experience with EVM use in defense projects that could have influenced the data collected in the interview process. The amount of bias present in a study affects the perceived credibility of the research (Tuohy, Cooney, Dowling, Murphy, & Sixmith, 2013). Bracketing personal experiences is an acceptable approach in academic research but removing all bias is unlikely (Marshall & Rossman, 2016). I used bracketing to reduce the impact of my personal biases. The second limitation was that while demonstrated EVM strategy collection occurred that improved cost and schedule outcomes in defense contractor projects, determining the most effective strategies was not part of this study. Defense contractor business leaders will need to evaluate the strategies most appropriate for their project based on that respective project s bounds. Reviewing the advantages of particular EVM strategies is an opportunity for future research. Delimitations The scope of a study is established or narrowed with defined study delimitations (Domingos et al., 2014). I limited the study to demonstrated strategies by defense business contractor leaders. Furthermore, participants were limited to those defense business leaders that are in some type of leadership role who have been able to influence
21 10 the implementation and use of an EVM strategy on a defense project. A refined scope in case study research is key for an appropriate sampling technique (Marshall & Rossman, 2016). An additional delimitation was that evaluation of EVM strategy effectiveness did not occur. I did not investigate behavioral aspects such as employee opinion of a strategy of the effect of EVM use on personnel. Furthermore, I did not explore the relationship between EVM variables within the EVM equation relative to EVM strategy effectiveness. Significance of the Study This study might be of value to defense contractor business leaders because the use of EVM strategies could lead to improved cost and schedule outcomes for projects. EVM can help project managers build foundational strategies for project management processes. Project managers continually encounter cost and schedule overages, and EVM provides advanced knowledge of those issues (Elshaer, 2013). While awareness of the issues was helpful, having a strategy to mitigate the issues with the available data was a higher-level capability. Business owners should collect not only EVM data, but also understand EVM strategy for project management and project outcome improvements. If a strategy identified a more effective way to use EVM and gain value from it, resources no longer required for the project could return to the organization for other uses (Donovan, 2015). The results of this study may assist project managers and enterprises with strategies for improving outcomes with EVM.
22 11 Socially responsible and environmental improvements continue to gain traction in most business sectors (Lubber, 2015). Defense contractor business leaders concerned with effecting beneficial social change could gain value from this research because, with the results, they could help improve business performance and potentially return resources for social improvement (Ducassy, 2013). Investment in social and environmental improvements can strengthen employee commitment and is ultimately connected to the community at large (Ellinger et al., 2013). Consumers were concerned with how companies address environmental issues and positively supported companies that focus on environmental improvement (Ioannou & Serafeim, 2015). Business leaders that improve environmentally stay competitive and can continue to focus on socially responsible issues (Martinez-del-Rio & Céspedes-Lorente, 2014). Defense business leaders could apply resources gained from efficiency to development less harmful products that use less fuel, create less pollution, or use less environmentally toxic materials. Potential exists for these environmental improvements to migrate to other industries, thus continuing social improvement. A more successful business may also improve society with additional jobs, technological advancement, and overall improvement of the community. A Review of the Professional and Academic Literature The purpose of this study was to explore EVM strategies implemented by defense business contractor leaders. An in depth review of the literature involved extensive research into EVM and the associated strategies demonstrated in defense businesses. A review of the themes in current EVM research confirmed EVM use could improve
23 12 meeting cost and schedule goals for projects when EVM use transpired. While the study focus was on EVM strategies, project management requires the use of a multidisciplinary approach. In broad terms, program managers that work in the defense industry use EVM (Townsend, Mazzuchi, & Sarkani, 2014). EVM use occurs to access cost, evaluate schedule and performance, evaluate planned work against completed progress, and determine how resources are used (Townsend et al., 2014). I conducted cross reference research from a broad and extensive list of EVM terms, including such terms as EVM improvement, earned schedule improvement, EVM strategy use, and project forecasting with EVM use. An assortment of academic databases such as ProQuest, ERIC, and Business Source Complete supported the review and was available through the Walden Library. Google Scholar linked to the Walden Library assisted me in gathering relevant articles free of charge. Peer-reviewed articles contributed greater than 85% of the sources used and more than 85% of the sources were less than 5 years old. Ulrich s Web Global Serials Directory supported the verification of peer-reviewed articles. A limited number of sources used were outside the 5-year recent period for support of the conceptual framework, as well as foundational support for the overall study. Journal articles and source selection resulted based on applicability to this study and not on the EVM research area as a whole. Table 1 below is a summation of the sources used in my research.
24 Table 1 13 Summary of Sources # of Sources % of Sources Literature Review Peer Reviewed Less Than 5 Years Old Full Study Peer Reviewed Less Than 5 Years Old % 87% 96% 87% A large portion of the research that I studied was quantitative in nature. EVM quantitative research was more common than qualitative research due to the mathematical and variable relationship within the EVM equation itself. With such a large amount of quantitative research data available, a qualitative review was ideal because triangulation in social sciences is a valuable way for reliability and validity verification (Marshall & Rossman, 2016). Qualitative research allows the researcher to focus on the exploration of a participant s experiences and perceptions in the world with a deeper relationship between the participant and the researcher (Finlay, 2014). A shared experience between participants and the researcher allows exploration of the topic in a deeper way because of an empathy understanding relationship (Finley, 2014). Empathetic research does not introduce bias, but rather a sensing of the participant for a better understanding of the experience (Finley, 2014). Qualitative research allowed me to
25 conduct an exploration of EVM strategies versus statistical values that quantitative 14 research would have provided. Interviews with the participants facilitated a strategy analysis that responses from a survey or statistical quantitative review could not provide (Marshall et al., 2013). The literature review is the foundational starting point for a study after a potential research area is determined (Marshall & Rossman, 2016). An understanding of existing research, gaps in the existing research, and themes came from the literature review (Marshall & Rossman, 2016). The literature review also allowed refinement of the research and interview questions (Marshall & Rossman, 2016). The credibility, transferability, dependability, and confirmability of the research derived from the literature review because the literature review reflected the depth and extent of the research (Corbin & Strauss, 2014). Earned time, as the conceptual framework underlying theory, provided the stance by which I reviewed and analyzed the literature and built this multiple case study. The prevailing themes from the literature review were (a) improvement of EVM estimating values, (b) EVM analysis as a skill set, (c) strategy consideration, (d) accounting for risk using EVM, and (e) leadership style and EVM use. Application to the Applied Business Problem The purpose of this qualitative multiple case study was to explore EVM strategies that Washington, D.C. area defense contractor business leaders were using to improve cost and schedule goal accomplishment. Business leaders in the defense industry struggle with the application of EVM strategy toward improved cost and schedule outcomes (Ancosky, 2013). In this qualitative case study, I examined EVM strategies for
26 business leaders at defense companies with application to the problem of determining 15 EVM strategies that can improve cost and schedule goal accomplishment. With much of the existing EVM research focused on improvement of the EVM equation itself, the existing quantitative research failed to provide sufficient strategies for the use of EVM in improvement of cost and schedule outcomes. Relevant qualitative strategy exists with the basis determined on the quantitative EVM studies, but a deeper review is necessary (Batselier & Vanhoucke, 2015). The business problem and research question were rooted in the foundational conceptual framework of earned time. Conceptual Framework Foundation Understanding of the conceptual framework in a qualitative study is key to a deep review of the research question. The way in which the phenomenon under review started supports further research into the area of study through a recognition of where the research came from and began (Wiesenfeld & Brockner, 2012). Understanding how previous researchers examined the research and treated the conceptual framework understanding helps current researchers frame current research and creates a research question (Marshall & Rossman, 2016). Earned time theorists, the Gilbreths, stated that work has a value in both time to do the effort and a cost associated with the respective effort (Gilbreth & Carey, 1948). As efficiency and motion study experts, the Gilbreths looked for ways to improve and increase productivity in industrial-based industries by reducing wasted action. The ability to induce efficiency first came from understanding the time and cost with producing a product (Gilbreth & Carey, 1948). By understanding the foundation of the work in segments, efficiency introduction occurred in production by
27 removing unnecessary effort and induced an improvement in the learning curve for 16 workers (Gilbreth & Carey, 1948). The Gilbreths sought to reduce unnecessary motions in industrial production or construction by studying the most efficient way to complete a task (Gilbreth & Carey, 1948). F. Gilbreth, for example, introduced a platform that remained level to the current bricklayer under work to reduce brick masons bending over to pick up bricks (Gilbreth & Carey, 1948). The improvements to the bricklaying process migrated to large projects such as bridges and significantly reduced completion times (Gilbreth & Casey, 1948). By reducing the time to complete a project, cost reduction normally happened as well (Gilbreth & Casey, 1948). Cost reduction resulted in many products being cheaper and produced in larger numbers (Gilbreth & Carey, 1948). This cost reduction happened because learning occurred that reduced the time for the effort until eventually a flattening of the efficiency when the learning curve was achieved (Gilbreth & Carey, 1948). F. Gilbreth focused on removing inefficiency in even simple effort and practiced teaching techniques to children (Gilbreth & Carey, 1948). Economies of scale and earned time are now foundational concepts across industry and governmental entities alike (Chaplin, 2015). In addition, the drive to reduce wasted effort exists throughout production-based industries. The motivation for my analysis into earned time theory supported review of current EVM theory analysis and the reasoning of why EVM strategy use might improve cost and schedule project outcomes. The majority of the research that I reviewed relied on the EVM theory created in the 1960s by representatives of the Department of Defense
28 17 (Kwak & Anbari, 2012). Originally, the theory for cost and schedule improvement was the program evaluation review technique/cost (PERT/Cost) within the government, but later the PERT/Cost method became EVM (Trietsch & Baker, 2012). PERT/Cost development came from the recognition by government leaders that program managers underperformed relative to cost and schedule goals (Hunter et al., 2014). Researchers consider early earned time theory questions of value for EVM research (Trietsch & Baker, 2012). Current EVM theory used by project managers derives from previous variations of earned time theory and efficiency thought. There are several theories related to cost and schedule analysis contributed to the current EVM theory (Kwak & Anabari, 2012). This includes PERT/Cost and other variations. Some of the government s iterations on earned time failed because they became overly burdensome for capturing useful information (Kwak & Anabari, 2012). Some of these EVM methodologies also failed to answer the basic question of earned time concerning how to determine the value of work and ultimately induce efficiency (Gilbreth & Carey, 1948). Improvements made from the early theories by project managers and researchers contribute to EVM effectiveness today. While the variations of EVM provided a useful foundation of EVM as EVM is today, the variations all relied on earned time for the principal ideas. Originally, the individuals applying earned time to projects relied on defining the value of work to create efficiency in the manufacturing process. Project managers now use EVM to improve clarity into cost and schedule accomplishment against a planned project baseline (Kwak & Anabari, 2012). EVM supported my review of efficiency into
29 18 the process by understanding the value of a work effort (Gilbreth & Carey, 1948; Kwak & Anabari, 2012). Private contractors working on government programs are now required to use EVM as a measurement methodology for cost and schedule (Moy, 2016; Plummer, 2010). The success indicated by EVM use on government projects has supported the migration of EVM use to other industries (De Marco & Narbaev, 2013). EVM has now become an important tool for defense contractor business leaders monitoring cost and schedule performance (Hunter et al., 2014). As a program progresses, defense contractor business leaders are ultimately able to gauge final cost and schedule and adjust as necessary for goal accomplishment (Gershon, 2013). EVM continues to undergo review by project managers and researchers for improvements for goal accomplishment. Several different academic researchers (Moy, 2016; Plummer, 2010; Shah, 2014) studied EVM theory and, by relation, earned time theory as the underlying foundation of EVM. Plummer (2010) studied EVM in relation to EVM use on information systems projects and the effects of using EVM on the projects under Plummer s review. The analysis included Plummer s review of data back to the 1970s up to within a few years of the 2010 published results. While EVM proved helpful, almost 65% of the software for Plummer s selected government Information Technology (IT) programs were not useful, and ultimately 98% of the software required rework (Plummer, 2010). Plummer s use of EVM pointed out issue areas but adjustments did not change the outcomes. Plummer did not identify earned time out right, a gap reflected in much of the current EVM research, but Plummer did seek analysis into earned time and efficiency of effort by reviewing IT
30 19 systems and their failure to understand the amount of time and effort actually associated with an IT effort. Other research I reviewed focused on EVM and associated project principals such as project risk related to project accomplishment. Shah (2014) completed a study focused on EVM and the close association with risk management. Results from Shah s study showed program managers using a project management approach with both EVM and risk management had better cost and schedule outcomes than program managers who did not (Shah, 2014). EVM analysis was useful for program managers because completed work helped the Shah study program managers determine trends and identify areas or concern and issues. Risk management included the planning for and consideration of future issues that EVM use alone might not identify because issues have not occurred yet against a baseline (Shah, 2014). The two-project management methods paired together offered an opportunity to look at a project s timeframe from start-to-finish (Shah, 2014). While Shah did not readily identify earned time and the question of value for work, Shah analyzed the basic question of earned time by identifying program risk and the work associated to overcoming risk has a value. The use of EVM along with risk management offers the opportunity for additional improvement as opposed to EVM alone. Other researchers, such as Moy (2016) focused on similar ideas. A specific set of projects considered for improvement related to EVM use and improvement of cost and schedule outcomes was IT projects. Moy (2016) completed a study that built upon Plummer s (2010) review into Federal IT programs and success with EVM use. Moy s extensive quantitative research sought a variable relationship
31 between use of EVM and effective IT program management. Similar to other 20 quantitative studies such as the Chen (2014) study, Moy considered EVM values such as Schedule Variance (SV) and Actual Cost (AC) incurred and then evaluated for a relationship that would indicate project success against the baseline. Conclusions from the study showed a relationship between EVM values and IT program success existed (Moy, 2016). Like most of the other research reviewed, Moy did not directly identify earned time, but she did recognize EVM as a theory and that EVM captures value in terms of cost and schedule. While a relationship may exist between values, a strategy for application of this knowledge would be helpful for defense business contractor leaders. By using the selected interview questions, I have helped provide insight into the original thoughts outlined in earned time theory and the current EVM theory. A further review of the conceptual theory occurred with analyzing the collected research data. In the Presentation of Findings in Section 3, I pointed back toward the conceptual framework for encapsulating and displaying the results. Improvement of EVM Estimating Values An understanding of how an EVM system comes together is an important first step in considering EVM strategy and improvement. An EVM system derives from work packages that account for effort in terms of cost and schedule (Chen, 2014). EVM can then help leaders manage and relate an organization s EVM system for a project, which allows an organization to adjust, plan, and forecast a program in relation to the original planned scope (Townsend et al., 2014). EVM is a forecasting model that can provide projected EAC for the timeframe considered in the baseline to the total cost of a project
32 21 when completed (Chen, 2014). EVM can also provide the amount of time necessary for the completion of a project or EAC(t) (Chen, 2014). EAC and EAC(t) support the project management multidisciplinary approach by allowing a focus on areas that are lagging projections and the use of engineering, financial, or contracting strategies to address problems (Hunter et al., 2014). While EVM supports project management efforts, EVM is only as good as the input used (Mostafa, Bagherpour, & Kamyabniya, 2014). The lack of quality data or improvement in project management outcomes causes a lack of confidence in EVM use and the setting aside of EVM for the project (Donovan, 2015). While EVM provides valuable insight into the cost and schedule of a project, business leaders should understand the data from EVM and have confidence in the information EVM reflects. The aggregate data EVM systems reflect derives from lower level input and accuracy is important. Research exists (Chen, 2014) regarding EVM use and its improvement related to refining EVM outcomes. Much of this research has focused on improvement of the estimating values in the EVM foundation (Chen, 2014). Caron, Ruggeri, and Merli (2012) reviewed EVM, estimating value improvement in their study that included an evaluation of EVM using a Bayesian approach. Caron et al. then conducted research with the application of subjective analysis from multiple construction experts that were participating in the study (Caron et al., 2012). The participant s tacit knowledge and observations from previous projects, in conjunction with the collected EVM data, supported the study (Caron et al., 2012). The participants prior knowledge interwoven into the distribution model through mathematical application supported the
33 data collection (Caron et al., 2012). After the creation of the model, the researchers 22 utilized the model in a gas pipeline project (Caron et al., 2012). Application of the participating experts opinions to the PVs helped refine the EVM values (Caron et al., 2012). The model provided a pivotal step but further research was necessary for a deeper improvement consideration. Testing the model with a real project was a good idea because it showed actual application. While it was subjective analysis for the PVs, the hypothesis was that expert experience could improve EVM accuracy more than standard estimation techniques (Caron et al., 2012). The study results validated the theory that expert opinion improved EVM accuracy by using a distribution model with completion results (Caron et al., 2012). The statistical distribution showed results that aligned more with the actual values at project completion when the subjective expert opinion was part of the EVM estimation method (Caron et al., 2012). The importance of this particular study was that Caron et al. reviewed a construction project through completion and then analyzed the results. The application of the study in the gas pipeline project verified EVM as more than theoretical analysis with a practical application (Caron et al., 2012). Other researchers could either align with, or counter EVM use as improving project outcomes through their research. The use of EVM does not always show measurable project improvement. Other researchers reviewed EVM utilization and project management success and reported that EVM did not necessarily improve project management outcomes more than other project management mechanisms (Acebes, Pajares, Galán, & López-Paredes, 2013; Haji Kazemi, Andersen, & Krane, 2013). Some studies, including the Caron et al. (2012)
34 study, showed that the subjective use of expert opinion proved just as useful. Expert 23 opinion use was relative to PVs as well as overall EAC and EAC(t) outcomes. The Caron et al. study (2012) showed that against a dispersion model for cost and schedule goals, individual expert opinion was as useful in the outcome as EVM data. Expert opinion could help defense business contractor leaders but similar to using EVM at all, understanding a strategy for using expert opinion would be useful. Project managers that use EVM can benefit from refining EVM inputs because as a mathematical and statistical based system, EVM outputs can improve from increased input accuracy. Chen (2014) further validated that EVM validity improved by refining the legitimacy of planned values in the EVM modeling. The ability to adjust projected values for better outcomes came both from a quantitative mathematical formula and the use of experience based opinions (Chen, 2014). The difference in the Chen study as opposed to other studies was that Chen chose to review numerous methodologies to improve PVs rather than reviewing a particular technique. The hypothesis was that PV accuracy improvement increased EVM accuracy and project management success but that some procedures were more effective than others (Chen, 2014). When PVs adjustment occurred, Chen used statistical analysis to check EVM accuracy with linear alignment. The process of adjusting PVs throughout the process based on analysis followed as data transformation in the EVM system (Chen, 2014). For the data transformation, Chen relied on linear regression and ultimately determined that the foundational improvement of the PVs had direct correlation to EAC and EAC(t). PVs are a significant part of EVM, so improvement of PVs should have positive impact on overall
35 outcomes. Improvement of a part of an EVM system can have improvement on the 24 overall EVM system. Related to PVs in an EVM system is level of effort (LOE) tasks that do not have a discreet value. Researchers in another study (Townsend et al., 2014), similar to Chen (2014), sought to improve the estimation for LOE tasks that supported overall EVM value output. The issue with LOE tasks is that the work is not associated with a discrete task, but rather a LOE bridge task across functional areas (Townsend et al., 2014). An example is the overall effort across the engineering expertise that is required in a project but does not directly tie to a discernable engineering task (Townsend et al., 2014). Workforce management of engineers is required but does not have an easily measurable task (Townsend et al., 2014). These efforts still need captured in overall project workload (Townsend et al., 2014). Townsend et al. (2014) proposed a new methodology that captures the LOE work for project completion at an overarching level. While the Townsend et al. study improved EVM accuracy, Townsend et al. did not propose a strategy for EVM use that could improve EVM use for project managers. The issue with PVs for level of effort tasks is that the tasks derive from estimation across broad areas as opposed to specific effort. Estimation for a specific task comes from a previous effort and experience (Caron et al., 2012). An example provided by Caron et al. (2012) was a construction project concerning drilling for water. The project managers used previous construction efforts for time estimation required for the well construction (Caron et al., 2012). The issue with LOE is how does the project manager determine if the right amount of LOE is used or should it increase or decrease LOE tasks?
36 25 The methodology used in the Townsend et al. (2014) study suggested a way to improve PVs for LOE tasks and proved that this methodology was useful for accuracy improvement and ultimately EVM use. The opportunity for improvement with EVM exists if the values used in the EVM methodology improve. A review of the existing literature showed that EVM accuracy improved if the estimating values were refined for accuracy (Chen, 2014). LOE task estimation improved from a similar process of value estimating improvement (Townsend et al., 2014) and when value improvement occurred in the EVM system, confidence in EVM increased with project managers (Chen, 2014; Townsend et al., 2014). The overall improvement of the EVM accuracy planning values improved EVM use and strategy determination (Chen, 2014). Improvement of EVM estimating values could have a positive impact on EVM strategy for cost and schedule goal improvement. EVM Analysis as a Skill Set Project managers that lead Department of Defense programs continue to not meet cost and schedule goals. Defense acquisition project managers encounter issues such as inaccurate cost estimates, schedule delays, requirement changes, and burdensome bureaucracy (Cantwell et al., 2013). EVM is acknowledged within the defense industry as an effective program management method for cost, schedule, and risk management in projects and has helped project managers address some of the identified issues (De Marco & Narbaev, 2013). Some leaders within industry are not prepared to use EVM due to organizational project management immaturity and organization acceptance (Gershon, 2013). Program managers seek to meet the three pillars of success in broad terms for a
37 26 project. The three pillars are cost, schedule, and performance parameters (Cantwell et al., 2013). These three parameters, or objectives, set the bounds or environment in which the program manager or project team and leaders operate within (Lech, 2013). While program managers are aware of the bounds they operate within, using any management means available such as EVM should bring the most likely chance for success. A management tool available to leaders is the people available to do the work. Defense contractor business leaders build project teams comprised of people from numerous disciplines such as engineering, logistics, finance, contracting, program management, and various other disciplines that attempt to meet cost, schedule, and performance parameters (Drury-Grogan, 2014). EVM is a tool that across all the project management disciplines can help meet goals (Drury-Grogan, 2014). Ultimately, EVM supports better decision making through knowledge and with better decisions, better outcomes and more buy-in from stakeholders occurs (Beringer, Jonas, & Kock, 2013). Defense contractor business leaders could make better decisions with appropriate teams and adequate knowledge. Leading a project for project managers is a complex task with many interdependencies. A significant number of defense program managers fail to correct underperforming programs in respect to cost, and schedule goals because they do not understand the complexities involved (Cantwell et al., 2013). Besteiro et al. (2015) analyzed the skills most important for program managers to use during project management and reported EVM use and EVM understanding as the key attributes. Project managers ability to analyze PVs and comprehend those PVs with changes as the
38 project progressed under the monitoring and control skill set was very important 27 (Besteiro et al., 2015). In a related study, Brigham and Hayes (2013) found information technology and the ability to collect the right data for PVs development was important for project managers in the program manager skill set. The project manager s adjustment of the PVs required the right information through the program manager s ability to ascertain the correct data to use (Brigham & Hayes, 2013). During a Government and Accountability Office (GAO) review of Space Systems, the GAO determined that the EVM used on some projects lacked credibility because a review showed that an appraisal of the PVs did not happen for accuracy using the right tools (Chaplain, 2015). The GAO provided that without an analysis of the EVM values, the credibility of the EAC and EAC(t) was suspect (Chaplin, 2015). The GAO review validated that a project manager should understand the complexity of a project and of PVs for success. One of the complexities of a project is how work allocation takes place across the project. A key for project management success, aside from selecting the most appropriate EVM method, is alignment of the work breakdown structure (WBS) within the overall project cost and schedule (Khamooshi & Golafshani, 2014). The WBS assists project managers in understanding the scope of the project and assists in the comprehension of the necessary work (Khamooshi & Golafshani, 2014). As Narbaev and De Marco (2013) found in another business sector, the construction industry, project managers required a full understanding of scope for the best project outcomes. Just as defense project managers must align the WBS for scope, cost, and schedule, construction project managers should do the same (Narbaev & De Marco, 2013). EVM improvement
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